European airlines accused of price gouging
Once reliant on generous subsidies from state governments for survival during the COVID-19 pandemic, European airlines are now being accused of profiting at the expense of the traveler, as reported by the Greek daily Efimerida ton Sintakton.
European airlines quickly appealed for government aid when the coronavirus pandemic first led to quarantines and a halt in air travel in the spring of 2020. Governments responded generously, propping up these airlines with hundreds of billions of euros in subsidies.
However, when quarantines ended, the industry was ill-prepared to resume operations due to previous cutbacks. In a wave of chaos, thousands of flights were canceled, leaving tens of thousands of passengers stranded at their holiday destinations. Some had to endure days of delay before returning home, while others paid extra to secure seats on alternative flights.
Despite this tumultuous resumption of operations, airlines managed to evade significant repercussions. As travel demand soared this year, airlines leveraged the rising fuel cost to justify substantial ticket price increases. On average, prices soared by 20-30% last summer, with low-budget airline Ryanair leading the pack with a 24% increase.
Ryanair, which carries more passengers than any other airline in Europe, is now on track to achieve record profits for its financial year ending next March. The Irish airline's profits rose by 59% in the first half of its financial year, breaking all previous records.
Ryanair recently projected a full-year profit of between €1.85-2.05 billion, far surpassing its previous record of €1.45 billion in 2018. In response to these figures, the company announced plans to pay regular dividends to shareholders for the first time. Starting with an interim payment of €200 million in February, the company plans to distribute an additional €200 million in September next year. Ryanair intends to return approximately a quarter of its annual profits to shareholders yearly.
However, these profits have not come without controversy. There have been numerous complaints of hefty charges for minor oversights, such as downloading the wrong boarding passes, which resulted in a fine of £110 for an elderly couple.
Despite the mounting criticism, regulatory authorities such as the European Commission seem reluctant to intervene. Romanian transport commissioner Antina Valean stated that the Commission is closely examining the market dynamics that led to the price hike but clarified that the Commission has no power to regulate airfares. This statement indicates that any potential action may be limited to understanding the causes behind the price rise rather than implementing corrective measures.